Large Employers Double Down on Efforts to Stem Rising U.S. Health Benefit Costs which are Expected to Top $15,000 per Employee in 2020

Employers cite virtual care and strategies to manage high cost claims as top initiatives for 2020

WASHINGTON, Aug. 13, 2019 (GLOBE NEWSWIRE) -- With U.S. health care benefit costs projected to climb another 5% next year, large employers are doubling down on efforts to stem the increases, according to an annual survey released today by the National Business Group on Health. Employers identified implementing more virtual care solutions (51%) and a more focused strategy on high cost claims (39%) as their top initiatives for 2020. The survey also found that managing prescription drug benefit costs remains a high priority for employers in 2020.

The 2020 Large Employers' Health Care Strategy and Plan Design Survey found employers project the total cost of health benefits will rise 5% in 2020, taking cost management initiatives into account. That increase is identical to 2019’s projected increase - but actual costs are coming in lower. Large employers reported the actual increase in 2018 was 3.6%. Including premiums and out-of-pocket costs for employees and dependents, the total cost of health care is estimated to be $14,642 per employee this year, and projected to rise to an average of $15,375 in 2020. Employers will cover nearly 70% of costs while employees will bear about 30%, or nearly $4,500. Forty-four percent of employers ranked musculoskeletal issues as the top condition impacting their costs while 85% ranked it among the top three conditions. One in four (25%) employers ranked cancer as the top condition.

“One of the challenges employers face in managing their health care costs is that health care is delivered locally and change is not scalable. It’s a market-by-market effort,” said Brian Marcotte, President and CEO of the National Business Group on Health. “Employers are turning to market-specific solutions to drive meaningful changes in the health care delivery system.”

Employer interest in alternative payment and delivery models including accountable care organizations (ACOs) and high-performance networks (HPNs) remains strong. Nearly a third (31%) plan to implement either or both strategies in select markets in 2020, either directly or through their health plan, and that percentage could nearly double to 60% by 2022.

Interestingly, 49% of respondents plan to pursue an advanced primary care strategy in 2020, and another 26% are considering one by 2022. One-third of employers (34%) will deliver advanced primary care through an onsite or near-site health center while a growing percentage of employers (24%) are looking to directly contract with advanced primary care models in select markets. “Advanced primary care models move away from fee-for-service, encounter-based reimbursement to more comprehensive, patient-centered population health management,” said Marcotte.

Employers embracing more virtual care solutions

Employers continue to focus on broad-based solutions as they pursue local market opportunities. The number of employers who believe virtual care will play a significant role in how health care is delivered in the future continues to grow (64% for 2020 vs 52% for 2019). The majority of respondents (51%) will offer more virtual care programs next year. Nearly all employers will offer telehealth services for minor, acute services while 82% will offer virtual mental health services, and that could grow to 95% by 2022. Virtual care for musculoskeletal management shows the greatest potential for growth. While 23% will offer musculoskeletal management virtual services next year, another 38% are considering it by 2022.

“Virtual care solutions bring health care to the consumer rather than the consumer to health care. They continue to gain momentum as employers seek different ways to deliver cost effective, quality health care while improving access and the consumer experience. Of particular note is the growing interest among employers to offer virtual care for mental health as well as musculoskeletal conditions,” said Marcotte.

Pharmacy benefits costs a high priority

Managing pharmacy benefits and especially the high cost of specialty drugs and therapies remains a top priority for employers. The survey found 85% of respondents rate high-cost drugs as the number one or two most concerning pharmacy issues. “Employers are very concerned about how to finance the high cost of new million-dollar drug therapies. Some of these therapies will cost more than what an employee will earn in a lifetime,” said Marcotte.

According to the survey, 20% will have a point of sale rebate program in 2020, and that number could triple to 60% by 2022. Two thirds (67%) favor a model based on net price of medications with no rebate as an alternative.

Among other survey findings:

Fewer employers offering full replacement CDHPs: The number of employers offering full replacement consumer-directed health plans will shrink to 25% in 2020, down from 30% this year and 39% in 2018. Instead, employers will offer more plan choices like a preferred provider organization (PPO) plan.

Most employers have reservations about Medicare for All: While 72% of employers believe Medicare for All will reduce the number of uninsured, 81% believe Medicare for All will increase taxes; roughly half say it will lead to higher U.S. health costs (57%) and higher employee costs (47%). Employers are mostly divided on whether to expand Medicare below age 65.

About the Survey

The 2020 Large Employers' Health Care Strategy and Plan Design Survey was conducted between May and June 2019. A total of 147 large employers participated. Collectively, respondents represent a wide range of industry sectors and offer coverage to more than 15.6 million employees and their dependents. More than 54% of respondents belong to the Fortune 500 and 39 belong to the Fortune 100.

About the National Business Group on Health®

The National Business Group on Health is the only non-profit organization devoted exclusively to representing large employers' perspective on health policy issues and optimizing workforce strategy through innovative health, benefits and well-being solutions. The Business Group keeps its membership on the leading edge of innovation, thinking and action to address health care cost and the delivery, financing, affordability and consumer experience with the health care system. Business Group members, many of whom have operations globally, include 73 Fortune 100 companies, and provide health coverage for more than 60 million workers, retirees and their families in over 200 countries. For more information, visit www.businessgrouphealth.org.

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